Altria, the maker of Marlboro cigarettes, reports their data show smokers 50 and older are returning to traditional cigarettes after having switched to e-cigarettes.
This trend is reportedly due to a mix of bad press, regulatory crackdowns on nicotine vaping, and — indirectly — the coronavirus pandemic.
CEO Billy Gifford told investors the news on Altria’s first-quarter earnings conference call on Apr. 30. Older vaping consumers, Gifford said, are primarily purchasing discounted cigarettes after the sustained vilification of the vapor product category and the Food and Drug Administration’s (FDA) push towards the premarket tobacco application (PMTA) deadline.
“Over the last several months, we’ve observed an increase in the number of age 50 and older smokers in the cigarette category,” Gifford said in the call. “We believe these smokers had previously switched to e-vapor products, but recently returned to cigarettes due to negative publicity and regulatory and legislative developments in the e-vapor category.”
Marlboro’s share of the U.S. cigarette market fell by at least a half a percentage point to 42.8 percent, compared to 43.3 percent in the first quarter of 2019. However, the trend of vapers shifting towards cheap cigarettes is eating away at Altria’s retail share.
Nielsen data also suggests that Altria is losing retail share to cheaper brands, despite an increase in cigarette consumption partially tied to stockpiling brought on by pandemic fears.
Bonnie Herzog, a managing director at Goldman Sachs, noted in a market research note that Altria’s Marlboro brand is underperforming in total industry dollar sales. E-cigarette market share is also decelerating, particularly tied to Juul Lab’s continued shrinking market.
Michael McGrady – Inside Sources – May 20, 2020.
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